TH Real Estate lining up new debt for warehouse fund

The company announced earlier this month that it had secured a six-year extension to its £1.1bn UK Retail Warehouse Fund, which had been due to expire at the end of next year.

Head of treasury Colin Throssell told Property Week that he expected to close a £400m refinancing of the fund at the end of the year or early in 2015, reflecting a loan-to-value ratio of 40-45%in line with current levels.

The refinancing is expected to introduce a revolver on top of a term loan to give the fund added flexibility to make acquisitions.

“The new financing will give the fund more flexibility around how debt is used and will help the manager deliver on his plans efficiently at all times during the life of the debt and no matter what the market conditions. That is particularly important for a fund like this, which is actively managed and, when the opportunity is right, recycles its assets to a degree,” said Throssell.

The UK Retail Warehouse Fund has been a star performer for TH Real Estate, delivering a five-year total return of 17.6% per annum up to June 2014.

Throssell also revealed that TH Real Estate was working on a number of financing deals in Europe. In its Herald fund, it has agreed a new €45m debt facility with Deutsche Bank secured against the Centro Commerciale Metropolis in Cosenza, Italy, replacing existing debt with Morgan Stanley. The deal reflects a LTV of about 50%.

TH Real Estate is also close to agreeing new financing for another Italian asset. Within its European Outlet Mall Fund, it is working on a circa-€100m refinancing of its Serravalle designer outlet in Milan.

Throssell said market conditions for refinancing in southern Europe had improved significantly. For prime assets in northern Italy, margins had fallen to less than 3%.

“The liquidity and appetite for banks to lend has improved markedly and price competition has increased significantly as a result,” he said.

TH Real Estate is also looking to close a €120m refinancing of its Roermond outlet centre in the Netherlands - which is also held in the European Outlet Mall Fund. Both the Roermond and Serravalle deals reflect LTVs of less than 50%.